With the budget session of the Indian Parliament off to a stormy start and only days to go until the world’s largest democracy and third largest economy unveils its budget, William Hague and George Osborne are to meet with their respective counterparts in India to discuss key issues. Indian economic commentators expect Arun Jaitley, the Finance Minister, to have some blunt, but necessary words for the Indian people on key policy areas, including tax and subsidies.
The election of Narendra Modi, who some have dubbed the “Indian President Reagan”, has undoubtedly been a good thing for the Indian economy, which was severely held back by years of Fabian-style socialism and the dreaded five year plans of the now irrelevant Planning commission under the Congress Party. As Jaitley recently told journalists, the stunning victory has meant “investors are once again showing interest in India.”
Most commentators are in agreement that “Modi-nomics” will be a good thing for anyone who wants a slice of the Indian dream and feel that it is long overdue. Despite having some of the most competitive wages in the world, a combination of poor infrastructure, corruption and Byzantium bureaucratic structures have prevented India from becoming a global hub for low cost manufacturing.
The Government of India knows that the stakes could not be higher, with Jaitley saying that unless India meets the expectations of foreign investors looking to set-up shop in India’s manufacturing base, then “there will be no jobs, no revenue, and no infrastructure.” This is a government that means business.
But while the British government and EU politicians squabbled over Jean-Claude Junker and while the EU Free Trade Agreement has remained stuck in the mud, a host of foreign dignitaries – from Russia through to the US to Japan – have been busy forming a long queue at the South Block in New Delhi to foster new partnerships with new elected and outward looking Modi administration.
Laurent Fabius, the French Foreign Minister, has said that France has “high ambition of the partnership” from the new Indian government and was quick-off the mark to seal a $20 billion deal for the Dassault built Rafale fighter jet.
Japan, India’s fourth largest investor, has asked India’s new PM intervene to clear policy hurdles faced by some of its companies, including taxation issues. The Indian Government has said it is going to work with a variety of departments to “sort these out to the best ability, which will help improve the bilateral ties and investment.”
With Britain, however, things are a little more complicated. For all the talk about the UK and India developing a new “special relationship” as part of some 400 years of relations, Indian goods imports from Germany are nearly double those from Britain. A recent analysis of trade numbers by the ONS shows that India is the 11th most important destination for UK goods and the 20th most important for UK services.
We need to reinvigorate our outreach and start positively changing the opinion of not only the Government of India but also of the common Indian; draw upon the British Indian community to enable us to send a renewing message that this modern Britain is Great Britain – for its tolerance, multi-culturalism and forward looking vision. To start shifting the spectrum from the United Kingdom being seen through the broken prism of the past to being seen as the natural partner of choice of the future.
Let us hope that Osborne and Hague’s visit to India is just as productive as those of their French and Japanese counterparts. Top of their list of priorities should be to look east beyond the EU and take advantage of this unprecedented opportunity to engage with the newly elected, reformist, outward looking and centre-right Indian Government on key areas, including foreign direct investment; innovation cooperation and enforcement of intellectual property rights; bureaucracy and corruption, and taxation. The time to act is clearly now – to walk the talk together.